Obama, on bus tour, to unveil new strategy to curb college costs
College costs increased 600 percent in the past 30 years, and federal aid enabled it. What's needed is a 'shake up,' Obama told supporters – and it may not be popular with 'some who've made higher education their business.'
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Over the past few decades, tuition has risen two to three times the cost of inflation. In the last 10 years, tuition at public four-year colleges has increased about 75 percent, and at private colleges by about 25 percent – all at a time when median family income has fallen. The total amount of student debt has reached $1.2 trillion, and an increasing number of students find themselves burdened by tens of thousands of dollars of debt that they’re unable to repay, and that even a bankruptcy declaration can’t diminish.Skip to next paragraph
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According to the latest data released this week from the National Center for Education Statistics, a majority of undergraduates – 57 percent – are now receiving some sort of federal financial aid, up from 47 percent four years ago, the last time the NCES released statistics. Some 42 percent of undergraduates took out loans, up from 39 percent four years ago.
While the federal government ostensibly has little direct involvement with the financing of either private or public colleges, it issues about $150 billion a year in financial aid – all of which plays a key part in the budgets of most higher education institutions, and which comes with few strings attached to the institution.
There has long been a heated debate about the degree to which expanding federal financial aid has fueled tuition hikes and spiraling college costs. Some critics see the huge expansion of loans and grants as directly responsible, saying they provide misguided incentives to college and universities, and essentially shift costs away from the schools to the federal government and the families who are borrowing.
Others agree that tuition would not have been able to rise without the loan programs, but they also believe that the federal aid programs are needed to promote access to higher education. Still others discount the hypothesis entirely as a misguided attempt to get the federal government to reduce much-needed aid to students.
Still, many observers see student aid as the best leverage the federal government has to try to bring college costs under control and – just as important – to encourage better value and high-quality programs in exchange for students’ investment.
Increasingly, notes Ms. Laitinen, people are asking whether college is worth it – which, in her opinion, isn’t the right question. “College on average is unequivocally worth it,” she says. “But that’s on average. It doesn’t get to which program, at which college, at which price, which is what really matters.”
Laitinen and others say the government could start tying its aid – both grants and loans – to some sort of basic performance measures on the part of schools, possibly around cost, completion rates, or quality of education, ensuring that they are offering students a fair value and that students are not taking on debt they’re never likely to be able to repay.
Attaching such strings to federal aid, as Obama is proposing, would be very hard to implement, critics say.
“It would be a massive change in federal higher education policy that would flounder on the shoals of controversy,” says Terry Hartle, a senior vice president at the American Council on Education. Any ranking system, he notes, would depend on which weights are applied to which measures, and would become incredibly controversial as people begin to realize which institutions and states would be winners and which would be losers.
Students in one state might have more eligibility for aid than students in another state, based on how their public universities rank – another wrinkle that Mr. Hartle says would be tough to iron out.
“This is an easy thing to conceptualize at a very high level, but it becomes far more controversial and contentious the more you try to define it,” says Hartle.